Will China be the “growth pole” that will snatch the world from the jaws of depression?
This question has become a favorite topic as the heroic American middle class consumer, weighed down by massive debt, ceases to be the key stimulus for global production.
Although China’s GDP growth rate fell to 6.1% in the first quarter — the lowest in almost a decade — optimists see “shoots of recovery” in a 30% surge in urban fixed-asset investment and a jump in industrial output in March. These indicators are proof, some say, that China’s stimulus program of $586 billion — which, in relation to GDP, is much larger proportionally than the Obama administration’s $787 billion package–is working.
Countryside as Launching Pad for Recovery?
With China’s export-oriented urban coastal areas suffering from the collapse of global demand, many inside and outside China are pinning their hopes for global recovery on the Chinese countryside. A significant portion of Beijing’s stimulus package is destined for infrastructure and social spending in the rural areas. The government is allocating 20 billion yuan ($3 billion) in subsidies to help rural residents buy televisions, refrigerators, and other electrical appliances.
But with export demand down, will this strategy of propping up rural demand work as an engine for the country’s massive industrial machine?
Read the full article at Foreign Policy in Focus